Foreign Corrupt Practices Act (FCPA): Cases

by Julie S. Mendel, SILA-A, CDEi | Dec 15, 2020
Foreign Corrupt Practices Act FCPA Cases

The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 after revelations of widespread bribery of foreign public officials by U.S. companies. The purpose of the FCPA was to remedy the problem and create a level playing field for American businesses by ending the corruption and restoring public confidence in the integrity of the marketplace.

When the bill was passed, Congress noted in its report that the law was specifically “designed to prohibit the corrupt use of the mails or other means and instrumentalities of interstate commerce by U.S. corporations, directly or indirectly, to bribe foreign officials, foreign political parties, or candidates for foreign political office.” Since the passage of the Foreign Corrupt Practices Act in 1977, there have been hundreds of civil and criminal cases brought by the Securities Exchange Commission (SEC) and Department of Justice (DOJ).

This article is Part 4 in a series on the Foreign Corrupt Practices Act and lists FCPA cases settled with the SEC from 2019–2020. To learn more about enforcement of the FCPA and the penalties for FCPA violations, see FCPA Part 3: Enforcement and Penalties. To see the full list of articles in our FCPA series, see the list below.

The First FCPA Case: Page Airways, Inc. (1978–1980)

On April 12, 1978, the SEC announced the first-ever FCPA case after the law’s passing when they filed a civil injunction against Page Airways, an aeronautics firm based in New York. We’ve provided some details into this case as a curiosity because, beyond being the first FCPA enforcement action ever taken, the case is just as interesting in how it ended as how it began.

In its announcement of the case, the SEC stated:

The Commission’s complaint alleges that Page and the individual defendants variously engaged in a scheme to sell Gulfstream II aircraft and other aircraft, products and services by, directly and indirectly, making payments to foreign government officials and employees and other corrupt, illegal, and improper or unaccountable payments. The Commission also charges that Page and the individual defendants, variously failed to file required reports with the Commission and filed false and misleading annual reports and proxy solicitation material with the Commission relating to the aforementioned matters.

In its suit, the SEC charged that Page Airways and its top officers had made more than $2.5 million in bribes and illegal currency transactions to foreign governments to promote its overseas aircraft sales. Specifically, the SEC stated that Page had sold more than $15 million in goods and services to the Idi Amin regime in Uganda without disclosing it to its stockholders, as required by law. One of the specific improper payments even included a new Cadillac Eldorado convertible presented to Idi Amin himself.

After two years of litigation, however, the SEC abruptly and curiously dropped the civil suit against Page Airways. In its announcement of the suit’s settlement, the SEC stated (emphasis added):

Nothing in the settlement constitutes evidence of or an admission with respect to the allegations of the Commission's complaint. Moreover, the Commission stipulated to the dismissal of the action as to all individual defendants. In reaching settlement of this action, the Commission and Page considered concerns raised by another agency of the United States Government regarding matters of national interest.

Intriguingly, it was later revealed that there had been some relationship between Page Airways and the Central Intelligence Agency (CIA) and that the suit had been dropped at the CIA’s request. Later, investigative journalist Murray Waas wrote a detailed article for The Nation showing that not only had Page Airways had relationship with the CIA, but the aeronautics company also had connections with foreign intelligence services as well, including the Israeli Mossad.

Recent Foreign Corrupt Practices Act Cases (2019–2020)

During 2019–2020, there have been 26 FCPA cases settled with the SEC:

  • Goldman Sachs Group, Inc. - The firm agreed to pay more than more than $1 billion to settle SEC charges that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA in connection with the 1Malaysia Development Berhad (1MDB) bribe scheme.
  • J&F Investimentos, S.A. - Brazilian nationals Joesley Batista and Wesley Batista and their companies J&F Investimentos S.A. and JBS S.A., a global meat and protein producer, have agreed to pay nearly $27 million to resolve charges that they caused Pilgrim’s Pride’s violations of the books and records and internal accounting controls provisions of the FCPA. The Batistas also agreed to each pay a $550,000 civil penalty. The parties also agreed to a three-year self-reporting undertaking. (10/14/20)
  • Herbalife Nutrition, Ltd. - The Los Angeles-based direct selling company agreed to pay more than $67 million to resolve charges that it violated the books and records and internal accounting controls provisions of the FCPA arising out of a bribery scheme orchestrated by its China subsidiary. (9/28/20)
  • World Acceptance Corp. (“WAC”) - Without admitting or denying the SEC’s findings, WAC settled to anti-bribery, books and records, and internal accounting controls provisions of the FCPA and paid over $20 million to resolve charges arising out of a bribery scheme orchestrated by its former Mexican subsidiary. (8/6/2020)
  • Alexion Pharmaceuticals - Boston-based pharmaceutical company Alexion Pharmaceuticals Inc. agreed to pay more than $21 million to resolve charges that it violated the books and records and internal accounting controls provisions of the FCPA. (7/2/20)
  • Novartis AG - Global pharmaceutical and healthcare company and its former Alcon subsidiary agreed to pay over $340 million to resolve SEC and DOJ charges arising out of conduct in multiple jurisdictions. (6/25/20)
  • ENI S.p.A. - Italian multinational oil and gas company agreed to resolve charges that it violated the books and records and internal accounting controls provisions of the FCPA in connection with an improper payment scheme in Algeria. (4/17/20)
  • Asante Berko - SEC charged a former executive of a financial services company with orchestrating a bribery scheme to help a client to win a government contract to build and operate an electrical power plant in the Republic of Ghana. (4/13/20)
  • Cardinal Health - Ohio-based pharmaceutical company Cardinal Health, Inc. agreed to pay more than $8 million to resolve charges that it violated the books and records and internal accounting controls provisions of the FCPA in connection with its operations in China. (2/28/20)
  • Tim Leissner - A former executive of Goldman Sachs Group Inc. agreed to a settlement with the SEC that includes a permanent bar from the securities industry for violating the FCPA by engaging in a corruption scheme, by which he obtained millions of dollars by paying unlawful bribes to various government officials to secure lucrative contracts for Goldman Sachs. (12/16/19).
  • Ericsson – The multinational telecommunications company agreed to pay more than $1 billion to the SEC and DOJ to resolve charges that it violated the FCPA by engaging in a large-scale bribery scheme involving the use of sham consultants to secretly funnel money to government officials in multiple countries. (12/6/19)
  • Jerry Li – SEC charged Jerry Li, a Chinese national and former managing director of the Chinese subsidiary of a U.S.-based direct selling company listed on the NYSE, for bribing government officials in China to obtain direct selling licenses made through payments of cash, gifts, travel, meals and entertainment. (11/15/19)
  • Westport and Nancy Gougarty – SEC charged this Canadian issuer and its former CEO Gougarty with bribing a Chinese government official in violation of the FCPA along with related violations of the books and records and internal accounting controls provisions. Westport and Gougarty agreed to pay more than $4.1 million to settle the charges. (9/27/19)
  • Barclays – The UK-based bank agreed to pay $6.3 million to settle violations of the internal accounting controls and recordkeeping provisions in connection with its hiring practices in Asia. (9/27/19)
  • Quad/Graphics, Inc. – the marketing solutions and printing service provider agreed to pay nearly $10,000,000 to resolve charges that it violated the FCPA by engaging in multiple bribery schemes in Peru and China, and creating false records to conceal commercial transactions with a state-controlled Cuban telecommunications company that were subject to U.S. sanctions and export controls laws. (9/26/19)
  • TechnipFMC plc – The global oil and gas services company agreed to pay more than $5 million to resolve violations of the FCPA’s anti-bribery, internal accounting controls and recordkeeping provisions by FMC Technologies prior to its 2017 merger with Technip.S.A. for conduct related to Iraq. (9/19/19)
  • Sridhar Thiruvengadam – agreed to settle charges relating to his role in a bribery scheme while serving as chief operating officer of Cognizant, a New Jersey-based technology company. (9/13/19)
  • Juniper Networks – The California-based telecommunications company agreed to pay more than $11.7 million to resolve violations of the FPCA's internal accounting controls and recordkeeping provisions in China and Russia. (8/29/19)
  • Deutsche Bank AG – Deutsche Bank AG agreed to pay more than $16 million to resolve violations of the FCPA's internal accounting controls and recordkeeping provisions in connection with its hiring practices. (8/22/19)
  • Microsoft Corporation – The company agreed to pay more than $24 million to settle SEC charges related to FCPA violations in Hungary, Thailand, Saudi Arabia and Turkey and criminal charges related to Hungary. (7/22/19)
  • Walmart Inc. – SEC charged Walmart with violating the books and records and internal accounting controls provisions of the FCPA by failing to operate a sufficient anti-corruption compliance program for more than a decade as the retailer experienced rapid international growth. Walmart agreed to pay more than $144 million to settle the SEC’s charges and approximately $138 million to resolve parallel criminal charges by the DOJ for a combined total of more than $282 million. (6/20/19)
  • Telefônica Brasil S.A. – SEC charged telecommunications company Telefônica Brasil with violating the accounting provisions of the FCPA when it sponsored the attendance of government officials at the World Cup and Confederations Cup. Telefônica Brasil agreed to pay a $4,125,000 penalty to settle the case. (5/9/19)
  • Fresenius Medical Care AG & Co. – the German based provider of products and services for individuals with chronic kidney failure has agreed to pay $231 million to the SEC and Department of Justice in a global settlement to resolve violations of the FCPA in multiple countries over the course of nearly a decade. (3/29/19)
  • Mobile TeleSystems PJSC – the Russian-based telecommunications provider agreed to pay $850 million in a global settlement to resolve violations of the FCPA to win business in Uzbekistan. (3/6/19)
  • Cognizant – The New Jersey-based technology company agreed to pay $25 million to settle violations of the anti-bribery, internal accounting controls, and recordkeeping provisions. (2/15/19)
  • Gordon Coburn and Steven E. Schwartz – the former Cognizant officials were charged with authorizing $2.5 million in bribe payments to a government official in India. (2/15/19)

Full Foreign Corrupt Practices Act (FCPA) Series

This article is Part 4 in a four-part series on the Foreign Corrupt Practices Act of 1977 (FCPA). For more information about the FCPA, see the full series:

Foreign Corrupt Practices Act (FCPA) Courses & Training

To learn more about compliance with the Foreign Corrupt Practices Act, WebCE offers the course Foreign Corrupt Practices Act: Avoiding Improper Payments, which is approved as continuing education (CE) credit for FINRA as well as CFP® certificants. To order this course and more, visit WebCE’s Firm Element course catalog by clicking the button below!

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